Beyond Auto Loans: Opportunities for Lenders to Own the Car Buying Journey

The dominance of banks and credit unions in the auto financing market is under threat. Digitalization has profoundly refashioned how consumers shop for cars, line up financing, and pay off their loans. Digitalization has collapsed timeframes, erased geographic distances, and opened the door for captive lenders, “buy here, pay here” alternatives, online lenders, fintechs, and influencers to target eight phases of the car-buying lifecycle. 

Javelin’s analysis of auto lending at banks and credit unions shows that many FIs engage prospects only during one or two steps of the shopping experience centered on the loan application. FIs that will be at greatest risk are those that lack digital banking experiences that engage customers in the eight stages, which include researching cars and pricing, arming shoppers with prequalified loans, and the years-long loan-servicing period when FIs can influence the next purchase, too. 

Key questions discussed in this report:

• What are the eight stages of the car-buying lifecycle?
• How are challengers winning share of mind and wallet?
• How can digital banking engage customers in each stage?
• How can banks and credit unions create digital banking experience that counter the “off-ramps” that take prospective borrowers to challengers?
• How do industry players exert influence on where shoppers ultimately line up auto financing?  

Companies Mentioned:

Auto Credit Express, Bank of America, Bankrate.com, Capital One, CarEdge, CarMax, Cars.com, CarsDirect, Carvana, Chase, Consumer Reports, Credit Karma, Credit Yes, Doug DeMuro, Exeter Finance, Ford Credit, Honda Financial Services, Jalopnik, JD Power, MyAutoLoan, NerdWallet, Ron Tonkin Honda, Scotty Kilmer, TikTok, Toni Dowell, Top Gear, Toyota Financial Services, TrueCar, U.S. Bank, United Auto Credit, Westlake Financial